A credit card can be a powerful tool for purchasing and credit building, but some times are better than others when it comes to actually getting for one. Before you get a new line of credit, it’s important to consider when to apply for a credit card. If you try to get a credit card at the wrong time, you could harm your credit score and set yourself back months. However, getting a credit card at the right time allows you to leverage your buying power and earn extra rewards while you spend.
If you are considering getting a new line of credit, these are some of the times when you should apply for a new credit card – and also the times when you shouldn’t.
The best time to apply for a credit card
These are some of the best times to apply for a credit card when you need a new line of credit.
You want to build credit
A credit card is one of the easiest ways to build credit, and it can also be a great way to repair your credit if your score has taken a dip.
When you pay off your bill on time each month, you establish a steady payment history, which accounts for 35% of your FICO credit score. This is especially important for those with new credit, such as students and new graduates, who may be applying for a credit card before buying a house. College can be a great time apply for a student credit card and begin your credit journey.
However, just as regular payments can help establish a positive credit history, missed payments can negatively impact your score, so it is important to remember to pay the statement of your new card on time each month. Also, be careful how much credit you use; your credit utilization ratio is another key factor in formulating your credit score. A new card could help this ratio, but you’ll want to be sure to keep your spending in check
You have a big purchase upcoming
If you need to make a big purchase, it could be worth it to get a new credit card. By financing the purchase, you can benefit from monthly payments instead of having to pay in one lump sum upfront.
Whether it is a wedding, vacation or holiday shopping, your big purchase could net you a special sign-up bonus when certain requirements are met. You might also want to consider a 0% APR credit card offer , which can give you an interest-free period to pay off your revolving balances before regular APR applies.
You have high-interest debt
If you have credit cards with high interest rates, it could be beneficial to apply for a new credit card with a lower interest rate. A balance transfer credit card is one way to take advantage of a 0% or low introductory APR. It gives you a chance to transfer balances from one account to another, offering the opportunity to catch up on your debt before the regular interest rate kicks in.
You will need an excellent or good credit score to qualify for the best rates, but it is one way to save money on interest each month so you can eliminate debt more quickly.
Your credit has improved
If your credit has improved, you could qualify for a better interest rate than you currently have. It could also be an opportunity to apply for another credit card that perhaps you could not qualify for in the past.
When you should not apply for a new credit card
Just as there are times when you should apply for a new credit card, there are times when it may not be the best idea. Some scenarios include:
You cannot afford the payments
A credit card can be a lifesaver when you do not have the funds upfront for a purchase or are seeking rewards or cash back on the money you already spend. However, if you cannot afford to make the monthly payments in full and on time, you could cause serious harm to your credit score that could take months or even years to repair.
➤ SEE MORE:Is a credit card cash advance the best option in an emergency?
You have recent credit inquiries
If you have recently applied for a credit card, loan or other form of credit, the resulting credit check likely damaged your score. This is because it creates a hard inquiry on your credit report, dropping your credit score in turn. It’s best to wait a bit to submit a new applications, if you can.
You just got a loan
If you recently got a loan or line of credit, it likely is not the best time to apply for a new credit card. In addition to the extra credit inquiry, a credit card gives you an additional debt to pay each month, potentially creating financial strain.
You are about to apply for a loan
If you plan on buying a home or getting a personal loan, now is a good time to avoid getting a credit card. It is important to keep your credit utilization low and your credit score high when applying for new credit.
How to choose the right credit card
If the time is right for a new line of credit, this is how to choose the right credit card for your needs.
- APR: Be sure to compare the annual percentage rate (APR) between different credit cards to find the most competitive rates for your new card.
- Fees: Most credit cards assess some sort of fees, whether they are annual fees, late fees, foreign transaction fees or balance transfer fees. Be sure to review the fee schedule for the credit cards you are considering so you know what to expect.
- Welcome bonus: Look for a credit card that offers a welcome bonus, such as an introductory interest rate or a certain amount of points upfront. There may be spending and other requirements that accompany this bonus, however, so be sure to review the terms and conditions before you apply.
- Rewards: Many credit cards offer special perks and rewards exclusively for cardholders. This can include everything from TSA PreCheck to rental car insurance and presale tickets.
Is now a good time to apply for a credit card?
It is also important to know how to time your credit card application. If you are having trouble getting a traditional credit card, you still have options. This could be the right time to apply for a credit card to improve your credit score, such as a secured credit card.
These cards can be a great way to build credit while benefiting from credit card privileges. They often require an upfront deposit, but then they work like a normal credit card, allowing you to practice strong financial habits while working on improving your credit.
You can also become an authorized user on a trusted family member or friend’s account or ask them to be a co-signer on a card with you. This leaves the other party on the hook if you default on your debt, but it also allows you to build credit without having to apply for a card on your own.
The bottom line on credit card application timing
The best time to apply for a credit card depends on your personal needs and financial situation. If you are already facing a ton of debt or are planning on a large purchase soon, it likely is not the right time to get a new card. However, if you are financially stable and have good credit, now could be a great time to capitalize on the many rewards and bonus offers available from today’s best credit cards. The right credit card application timing can help protect your credit score while extending the line of credit you need and the rewards that go along with it.
